RE:What's wrong with this pictureWell Materials Man, this isn't such a mystery (at least to me).
If a shop keeper has a widget for sale that everyone is lining up at the counter, outside the door and around the block waiting to buy, do you honestly think the shop keeper needs to entice more buyers by having a sale (insert Dividend value here)?
Newmont cut their dividend last quarter to help reduce costs because as you will recall the price of gold was about $200 to $300 bucks lower than it is now but moreso because as the CEO stated in the BNN interview that I previously posted, "Newmont shares are a Generational Buying Opportunity". In other words, Newmont management's thinking and decision to cut the dividend, even though they knew cutting the dividend won't be well received, was very likely because they knew their shares were so undervalued that eventually investors would benefit vastly from the rising share price, and well it looks like they were right.
Now, roll ahead about 6 weeks from Feb 28th and Newmont (NGT) shares have gone from a low of $39.96 CAD on Feb 08 to $56.79 on Friday April 12th. That's only a rise of $16.83 CAD per share or 42% gain in 6 weeks! Now do you really think Newmont or the institutions owning and trading Newmont right now really give a rats butt about the .25 cents US per quarter / 2.55% dividend right now?
The day traders and institutions are going to long and short this thing now along with the price of gold movements of the day until they know with more certainty where the price of gold is going to settle longer term. The volatile gold price move up and down $100 US and the NGT share price move over over $3.00 CAD on Friday April 12th shows just how profitable this thing is right now. Imagine being the Day Traders or Institutions on Friday that made over $3.00 a share on the way up going Long and then another $3.00 Shorting it on the way down. Do you think they care about the 2.55% dividend right now? I sure don't.
When the price of gold eventually stabilizes and Newmont share price peaks in 2025 and Newmont's balance sheet looks far better than it did only 6 weeks ago, you can bet the institutions will be all over Newmont management to increase their dividend, it's just not right now.
With Goldman Sachs calling for at least a $2,700 US gold price by year end and Barron's recently calling for at least $3,500 to $4,000, expect the Newmont share price volatility to continue. The geopolitics and the US Debt are currently the two main drivers of gold price right now and since I don't expect either of these to dissapate any time soon, expect the gold price and Newmont shares to bounce up and down like a Yo-Yo as gold continues to move higher yet.
If you bought and have held Newmont since Feb 28th, I don't think you'd be too concerned about the paltry 2.55% dividend right now. Put your seatbelt on Materials Man because Newmont's share price movements are going to make for a wild ride (bouncing up and down) from here as Newmont's earnings p/share increase exponentially quarter over quarter for the remainder of 2024.
I've owned and traded gold stocks for over 40 years and trust me the movement we're seeing here now is not the norm and is only acting like it is because there are much bigger things at play today. Yet the majority of citizens in the western countries (Canada and US in particular) are oblivious to what's really going on and how fast things could change. I hope what I see coming isn't really coming because it will make previous world wars look like a Sunday picnic.
My opinion only, please DYODD.
HB77